You may have heard the words ‘marriage allowance’ thrown around during certain times of the year, usually self-assessment period but what is it? Marriage allowance is when an individual can transfer 10% of their personal allowance to their spouse or civil partner. Spouse or civil partner must be a basic rate taxpayer to claim Marriage allowance.
This will allow a couple where one side does not claim their full personal allowance.
No, the allowance cannot be tailored. It will be 10% rounded to the nearest £10 or nothing.
The personal allowance will remain at £12,570 for future tax years up to including 2025/26
Lily and Marshall are married. Lily is a stay at home mum whereas Marshall earns £30,000 annually. They claim marriage allowance and transfer £1,260 of Lily’s personal allowance to Marshall. As a result, Lily’s personal allowance is reduced to £11,310 and Marshall’s increases to £13,830. This transfer saves Marshall £252 on tax (£1260 * 20%).
Troy has an income of £12,000 and is self-employed.
Vanessa has an income of £18,000.
Troy has £570 left of his personal allowance. They have claimed marriage allowance.
Vanessa’s personal allowance increased to £13,830 and her tax was reduced by £252. Troy’s personal allowance is reduced to £11,310 and has to pay tax on his income of £690 (12,000 – 11,310). This works out to be £138 of tax.
This marriage allowance has helped the couple save £114. (£252 saved by Vanessa less than the additional £138 additional tax paid by Troy).
If you have any more questions, feel free to email us on email@example.com
If you have not heard yet, HMRC have announced that they will not charge:
HMRC understand that this is a difficult time and therefore have given their customers additional time if they require it and will waiver any penalties similarly to last year. However, if possible please do file and pay on time.
I cannot afford to pay my Self-Assessment in one go, what can I do?
There is an option called ‘Time to Pay’. Once you have filed your 2020-21 Self-Assessment return, you can set up an online payment plan to spread Self Assessment bills up to £30,000 over 12 monthly instalments. Go on the GOV.UK website to set it up.
Yes. The payment deadline for Self-Assessment is 31 Jan 2022 and interest will be charged from 1 February 2022 on any amounts outstanding. A 5% late payment penalty is charged on any unpaid tax that is still outstanding on 3 March 2022. However, this year Self-Assessment customers will not be charged the 5% payment penalty if their taxes are paid by 1 April 2022.
No. There no changes.
Interest will be charged on late payment. The interest is 2.75%
Returns filed after 28 February will result in other late filing penalties such as the daily penalties from 3 months, 6 and 12 months.
There will be a 5% late payment penalty if taxes are outstanding and a payment plan is not set up by midnight 1 April 2022. Further late payment penalties will be charged if tax remains outstanding.
There will not be a late filing penalty if you file your SA800s and SA900s online by end of February. However if you file SA800s and SA900s by paper, the deadline was 31 October 2021.
HMRC Helpline: 0300 200 3822.
If you need any more guidance, feel free to email us on firstname.lastname@example.org
Christmas is around the corner and you may be throwing a Christmas party in the near future. We all need to be treated after the hectic year we’ve had.
Lets discuss the taxes on business parties, this could be an annual Christmas party or an annual barbeque. Depending on the event, you may or may not have to report this to HMRC and pay taxes.
The points to consider are:
It must be an annual event (happens once a year on a recurring basis). Parties such as retirement parties, team building events are taxable and must be reported to HMRC.
This event must be open to all employees and not selected employees
The total cost per person must be capped at £150. This will include employees, partners and any household members. This £150 total includes VAT, transport and overnight accommodation.
Cost per person = Total Cost/Number of Attendees
Number of Attendees includes non-employees such as partners.
You will not have to pay any taxes to HMRC if all of the following conditions are met.
If the cost per person exceeds £150, the whole amount will become taxable.
No, the £150 limit could be used across more than one event. However, the combined cost cannot exceed £150 per person.
In certain cases, if there is more than one annual event and the cost per person exceeds the £150 threshold, it is possible to get an exemption for the second party. This is known as trivial benefit (you must meet the conditions of the Trivial benefits).
If the conditions are met, the cost of the party must be reported on a P11D for employees (Section K) or reported on payroll if the company has registered for payroll benefits.
Employers will be required to pay Class 1A National Insurance contributions.
If you have a PSA, you will not have to report the annual party on payroll or your P11D. You will not need to pay Class 1A National Insurance. Employers will be required to pay Class 1B National Insurance (it is the same national insurance rate, it just falls under a different category).
The following types of expenses and benefits can be included in the PSA:
For further information, you can find it here.
If you would like to discuss any of the above, please email us on email@example.com about the party you are considering.
This has been a frequent question asked, I am here to answer your questions.
Each tax year, you get a personal allowance. In our current tax year, the personal allowance is £12,500. You do not pay tax on this income.
Your personal allowance may vary if you claim:
|Band||Taxable Income||Tax Rate|
|Personal Allowance||Up to £12,500||0%|
|Basic Rate||£12,501 - £50,000||20%|
|Higher Rate||£50,001 - £150,000||40%|
|Additional Rate||Above £150,000||45%|
Yes, there is a tax-free allowance for:
On 29 May 2020, the government extended the Coronavirus Job Retention Scheme (CJRS).
Employees that have been furloughed due to COVID-19 will be able to have a flexible employment from the 1 July 2020. Employers will have the flexibility to allow their furloughed employees to work part time. Despite this change, the government will continue paying 80% of salaries of their normal hours that they have not worked until the end of August.
The employer has control on the employment hours and the employer will be responsible for paying the full wage to their employee. There are no set requirements of the number of hours that an employee must work, this will vary depending on your business requirement.
This new working arrangement between an employee and employer must be confirmed in writing. This agreement with an employee must cover at least one week and reported and claimed when the employer claims for the CJRS grant. You can make claims every fortnight or month, but you will be required to submit both the standard hours of the employee and the actual hours worked.
If you have an employee who is unable to work or you do not have work to provide them, the employee can remain as furloughed and you can claim the grant under the current conditions.
There are a few changes that will change over the upcoming months regarding employer contributions.
If you are a smaller employer, some or most of your national insurance costs will be covered by the Employment Allowance.
The Coronavirus Job Retention Scheme will close to new individuals who wish to be furloughed from 30 June 2020.
Go to GOV.UK and search for Coronavirus Job Retention Scheme. Everything you need to know about this scheme is on GOV.UK
The eligible self-employed individual must make this claim themselves. HMRC will then calculate the grant you will receive
More information regarding the second grant will be available on 12 June but in the meanwhile, GOV.UK has the most recent and regular information regarding this scheme.
Working from home has increased throughout the years. This pandemic has welcomed working from home all over the world. Employees that are home working may face certain expenses that their employer may reimburse. If the employer does not reimburse these costs, the employee will have to see if tax relief is available.
Employers are now able to make tax-free payments to help employees cover additional expenses incurred whilst working from home. These payments are not subject to either income tax or national insurance.
To be eligible for this reimbursement, the employee must be carrying out their tasks under home arrangements. This should be some or all their work responsibilities at home.
HMRC has a clear guideline on what expenses can be reimbursed. If an employee has a regular work pattern such as working at home for an X number of days during the week, this will be accepted as working from home. The days chosen to work at home can vary but there should be a consistent pattern.
However, if you decide to take your work home for the evening, this will not be accepted. You will not be able to claim a reimbursement for any costs. There must be a clear agreement to work at home instead of the work locations.
COVID-19 Update: During this pandemic, if an employer’s office is closed or you have been advised to self-isolate, HMRC will accept that you are working from home. Employees will now be eligible to receive the allowance tax free from the period approved by their employer or when the government advice was declared.
The reimbursement can only cover certain employee expenses as stated by the HMRC guidance. There are usually two core approaches:
This follows as:
This is a fixed rate and beneficial to both employers and employees. Employers do not have to explain these expenditures and employees do not need to keep a record of their additional costs.
If the flat rate is not considered acceptable then a larger amount can be paid if there are clear proof to claim these expenses.
These costs can only be claimed if they are an additional cost to you whilst working from home. If working at home will have no impact on your home expenses, these cannot be claimed. Some costs that you cannot claim are:
Internet and broadband can be a confusing one. HMRC states that if an employee already has internet as a regular existing expense, this cannot be claimed. However, if you start working from home and you have no internet, and this is a requirement. This will be served as an additional cost and this can be claimed. Similarly, landline would work in a similar manner to broadband.
An employer may not choose to reimburse some, or all the additional expenses acquired from working from home. This means the employee is not automatically allowed tax relief on their extra costs. Tax relief is given to costs that are exclusively for the employee's employment.
Tax reliefs can only be claimed if an employee can meet certain requirements:
COVID-19: For employees working from home due to the outbreak, condition one and two should be easily met. However, condition three could cause implications for employees seeking tax relief if HMRC do not consider this met.
An employee who can prove that their home is also their workplace can claim tax relief for these expenses:
Costs that they cannot claim include:
Laptops are convenient however, in the long term, they might not be as comfortable. They may cause discomfort resulting to equipment purchases such as desktops, monitors and keyboards.
If an employer has purchased the essential equipment and it is not used by the employee for private use, the employee has no taxable benefit.
Due to the current outbreak, employees may have purchased their own equipment. Employers may have recommended this and offered to reimburse the cost. However, the reimbursement of these employee expenses will be taxable to the employee even if they solely use it for their employment. Employees will struggle to attain tax relief under capital allowances for any cost of the equipment.
One solution to the employee purchase of office equipment is for the employer to settle the tax receipt once their employee has been reimbursed by including it in a PAYE settlement agreement. On the contrary, this will result in an increase in administration and cost for the employer.
On 26 March 2020, the government introduced a new scheme called Self Employed Income Support Scheme (SEISS) to provide aid for individuals who are self-employed. A member of partnership can also claim this scheme. The scheme is now open to those who have been impacted by COVID-19 and have annual profits of less than £50,000. Half of their income should also be obtained from self-employment.
If the conditions are met, the SEISS will provide a grant value:
The scheme may be prolonged if circumstances change.
HMRC will contact you directly if you are eligible for the scheme. From the 4 May 2020, HMRC have been contacting individuals who are eligible for SEISS and you will be asked to claim online using the GOV.UK Online Service.
HMRC will calculate how much an individual can claim and then you will have to make the claim to receive the fund.
You can go online to check if you are eligible for this scheme by clicking here.
You will need the following to check if you are eligible:
You must be either self-employed or a member of a partnership
The profits criteria are met if:
2. You traded in each of tax years 2016-17, 2017-18 and 2018-19 and:
3. You traded in the Tax Year 2017-18 and 2018-19 and not 2016-17 and:
The online claim scheme is expected to open on 13 May 2020 however, an alternative method will be provided for those who cannot claim online.
You will be using the GOV.UK online service to make complete this claim, and you will need the following:
Please contact us for further information.
COVID-19 has caused unprecedented business interruption and lots of businesses are not prepared to face this unexpected business interruption.
Prevention is better than cure; and if your business is not prepared to handle the current crisis, it could be fatal to the business.
Be sure to work closely with your advisory team (internal and external), your finance team, mentors, industry colleagues; and plan how to be resilient during this difficult time.
1. Safety of your team
More than anything safety of your team is paramount. Make sure they are protected during this pandemic. Educate the team how to stay safe during this pandemic and set up remote working and avoid non-essential travel.
Set up regular calls and online meetings to keep the team motivated and look after their mental health.
2. Plan your cash flow
Cash is king and the lifeblood of any business. Do you have a cashflow forecast for the next 12 months? Cashflow forecast will provide you with a good indication how long your business can survive with the downturn in sales and what you should do for the survival of the business.
a. Contact your suppliers and creditors and try to negotiate payment flexibility. During this difficult time, many suppliers will agree to extend their payment terms.
b. See how you can reduce your monthly overheads
· If you are paying for any services that are not important to the business, consider cancelling them
· Re-negotiate your costs with your suppliers
· Consider whether you can freeze your monthly cost if the service is not used by the business during the period
· Re-consider your budgets – For example if you are not selling your products or services during this period you may consider reducing your marketing budget.
c. Business Rates:
· Check you are qualified for the business rate relief if not speak to your local council and request a payment holiday.
d. Cash Grants:
· Government is offering cash grants for small businesses which occupies a property. Keep an eye on the letters from the council regarding this grant. Some local councils have requested the clients to complete an online form to claim this grant.
· Speak to your landlord and check on a payment holiday
· Government has confirmed that commercial landlords cannot evict the client for unpaid rent up to 3 months.
· If you must close your business due to COVID-19, consider furloughing your employees.
· Government has confirmed they will cover 80% (maximum of £2500) of the salaries for the furloughed staff.
· It’s important not to lose your key employees and protect their value to the business and you will need them even more when this pandemic is over.
g. Check with your Bank on the financing options available:
You should be in regular contact with your banks and get the best financing plan in place so the business can survive during this difficult time. You should discuss what type of financing is required depending on your company’s needs, for example:
· Overdraft – if you need finance for short term
· Bank Loan – if you need financing for a long term
· Invoice finance – If your customers are taking more time to pay
· Asset Finance- if you are looking to purchase a business asset
Does your insurance policy cover business interruption and loss of profits? Please make sure you check with your Insurance provider what is covered. If you are not already covered for the business interruption and loss of profits, there is nothing much you can do at this point. However, it’s worth making a note and discuss this when your insurance is due for renewal. This is not the first-time businesses are affected by a pandemic and possibly the last time either.
4. Cyber Security
More and more people have started working remotely due to the lockdown and there are lots of emails and information available in regard COVID 19. Cyber criminals are very busy during this period targeting vulnerable individuals and businesses. Cyber security is quite important during this period, and following are few precautions you must take,
· Make sure all the computers have up to date Anti-Virus software
· Take special care on emails and be super vigilant when opening suspicious links
· Password protect your computers
· Activate 2-factor authentication whenever possible
· Use of VPN links to access secure data
The leadership team should be in regular communication to discuss how to handle the business during this crisis and survive unscathed through not only the pandemic itself but the likely recession that will follow.
6. Look for opportunities
Lots of businesses may crash during this pandemic. It’s expected nearly one million businesses will be closed during this pandemic. It’s not always bad news as there are some businesses, they do thrive during situations like this. So, please prepare yourself and look for opportunities and there will be always light at the end of the tunnel.
Good luck and take care of yourself and one another.
This pandemic has left most of us uncertain and unsure about our businesses and economy. Hopefully, this will give you a brief overview.
Please keep in mind that these topics are constantly changing according to the current affairs so it is important to consistently stay up to date using reliable resources such as GOV.UK. If you are still unsure, feel free to drop us an email and we will try our best to guide you.
Take care of yourself and one another.
Statutory Sick Pay (SSP) can be claimed if you are either diagnosed with coronavirus or self-isolating as guided by the government.
There is a temporary change to SSP where it can now be claimed from the first day rather than the fourth.
The current rate is £94.25 and this increases to £95.85 from the 6th April 2020.
If you are a small or medium sized UK based business or employer (less than 250 employees) as of 28th February 2020.
The government intend to reimburse COVID-19 related SSPs paid to employees for these businesses for up to two weeks.
A furloughed worker is an individual who is currently still employed but is unable to work due to circumstances out of their control such as Covid-19.
This scheme has been implemented to support employers who cannot afford to pay wages and avoid redundancies.
All UK Employers, big or small are entitled to this scheme. 80% of salaries, up to £2,500 per month will be covered by the government.
This scheme will be applied from 1st March 2020 with a preliminary period of three months however, depending on future circumstances, they may change.
Grants (non-repayable) have been set to help support smaller businesses including retail, hospitality and leisure businesses. This is a one-off cash grant up to £25,000 for businesses who use properties being used as cafes, restaurants, shops and leisure. A full list can be found on the gov.uk website.
If you are eligible for this grant, you do not have to do anything, your local authority will contact you and guide you from there.
Please contact your local authorities for any queries.
Coronavirus Business Interruption Loan Scheme (CBILS) aims to aid businesses such as SMEs affected by COVID-19 manage their funds. This consists of a loan up to £5 million with a loan term between 1 to 6 years with no interest for the first 12 months (the government will cover the first year of interest)
There will be a 100% business rates holiday over the next 12 months to cover all retail, hospitality and leisure businesses in England.
This 12-month period will run from April 2020 until March 2021
For further guidance, businesses can contact their local authority regarding this from 20 March 2020.
The government will support UK businesses registered for Value Added Tax (VAT) by deferring payments for three months from 20 March 2020 until 30 June 2020.
Self-Assessment payments due on the 31 July 2020 may be deferred until 31 January2021.
Yes, If you have a second self-assessment payment due on the 31 July 2020. The deferral is optional, if you are able to pay your payment, you should.
This automatically applied and there will be no penalties or interest for the payment if you decide to defer it until January 2021.
This also applies to businesses and firms that are currently facing a finance struggle as a result of COVID-19 and have tax liabilities, HMRC have extended their Time to Pay Offer.
Self Employed individuals will be able to apply for a grant that will cover 80% of their monthly averaged profits over the last three years. This grant will value up to £2,500 per month to help self employed individuals through financial distress. However, this will not take place till early June.
Companies House – Late filing penalties
A penalty notice is issued by Companies House when a limited company does not file the statutory accounts with companies house on time. The penalty notice will be issued as soon as the accounts is filed, and the scope of the penalty depends on how late the accounts are filed.
The table below gives you an idea on the penalty:
|Delay of the Filing Accounts||Private Company & LLP (£)||Public Company (£)|
|< 1 month||£150||£750|
|1 > 3 months||£375||£1,500|
|3 > 6 months||£750||£3,000|
|6 months >||£1,500||£7,500|
The penalty can be paid in various ways and the quickest methods include sending a cheque or using the BACS payment methods. There are alternatives provided on the letter with full details on how to complete this payment.
If the penalty is not paid on time, Companies House may instruct debt collectors to recover the penalties due and the company may end up receiving a CCJ (County Court Judgement) or bailiffs at the door.
You can appeal against a penalty if you believe that this was undeserved. However, appeals are only successful if you can prove that the circumstances are exception such as an unforeseen tragedy.
What is not an exception?
A full copy of what is exception and further details can be found on: www.gov.uk/companieshouse
Considering the level of penalties, you may be liable, we would advise to file the Accounts on time. It’s the responsibility of the director to ensure the Accounts is filed on time and a qualified accountant can assist you in filing the correct accounts on time. If you need any assistance in regard to your companies house accounts, please get in touch.